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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 15, 2022
Investment range
$2,550 - $7,600
Revenue potential
$95,000 - $440,000 p.a.
Time to build
0 – 12 months
Profit potential
$75,000 - $130,000 p.a.
Industry trend
Growing
Commitment
Flexible
Starting your locksmith business? Here are the most vital considerations:
Starting a locksmith business has pros and cons to consider before deciding if it’s right for you.
As new housing construction continues to increase, demand for lock installations is also expected to grow.
Trends in the locksmith industry include:
Challenges in the locksmith industry include:
Startup costs for a locksmith business range from $2,500 to $7,500. The low end assumes you’re already a trained locksmith and includes the cost of tools and a website. The high end includes the cost of education.
You can take courses to become a locksmith and security technician through Penn Foster for under $1,000. In just 8 months, you can be a licensed locksmith starting your new business.
You’ll need a handful of items to successfully launch your locksmith business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Tools for locksmithing | $500 - $1,500 | $1,000 |
| Locksmith training | $0 - $1,000 | $500 |
| Initial marketing budget | $500 - $1,000 | $750 |
| Total | $2,550 - $7,600 | $5,075 |
You can earn about $150 for the average job which generally includes a minimum trip charge of $50 to $100. More extensive jobs may be much more. Your profit margin after marketing and fuel expenses should be about 80%.
In your first year or two, you could run your business from home and do two jobs per day, six days per week, bringing in nearly $95,000 in annual revenue. This would mean $75,000 in profit, assuming that 80% margin. As your brand gains recognition, you could do eight jobs per day seven days a week. At this stage, you’d rent a commercial space and hire staff including other locksmiths, reducing your profit margin to around 30%. With annual revenue approaching $440,000, you’d make a tidy profit of more than $130,000.
There are a few barriers to entry for a locksmith business. Your biggest challenges will be:
Now that you know what’s involved in starting a locksmith business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research locksmith businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a locksmith familiar with keyless security systems.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as car locks.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Your services will depend on your level of skill. Potential services for a locksmith business include:
The average price per locksmith job is about $150. Generally, your prices will include a $50 to $100 minimum trip charge plus $35 to $50 per hour. Emergency 24-hour services can have higher prices. Your expenses when working at home by yourself will be mainly for marketing and fuel, so you should aim for a profit margin of 80%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be extremely broad, so you’ll need to spread out your marketing to include sites like Instagram, Facebook, and LinkedIn. You can also call on local construction companies to offer new lock installations. You can find them on Google or Yelp!
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office or even a storefront for a shop where you can also sell locks and other items. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to locksmith businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your locksmith business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a locksmith business.
Starting a locksmith business requires obtaining a number of licenses and permits from local, state, and federal governments. Some states require a locksmith’s license. Check with your state for requirements.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your locksmith business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as ManageMart, Jobber, or Service Fusion, to manage your dispatching, scheduling, estimates, invoicing, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your locksmith business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your locksmith business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a locksmith business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been in locksmithing for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in locksmith businesses. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a locksmith business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
As long as people need security, locksmiths will be in demand. It’s a $3 billion industry and still growing, as the US housing market is experiencing a boom. This presents growth opportunities for locksmiths because new homeowners require new locks and security systems. Demand from commercial establishments for the installation, repair, or rebuilding of security systems is also on the rise.
You can start a locksmith business from home for little cost and watch the money roll in. Now that you’ve done your business homework, get on the road to entrepreneurship and start building your successful locksmith business!
Yes, even if you run your business from home as a solopreneur, a locksmith business can be profitable. You can make around $150 per job, and your expenses will be very low, so you can make a nice living.
To differentiate your locksmith business from competitors, consider implementing the following strategies: specialize in niche services or target specific markets, offer 24/7 emergency services for quick response times, provide exceptional customer service and responsiveness, and utilize advanced technology and tools.
The locksmith business can be a good side hustle depending on your availability, skill level, and market demand in your area. It offers flexibility, as you can take on jobs during your free time or on weekends.
To recruit and train locksmiths for your business, consider the following steps: advertise job openings through various channels such as online job boards, industry forums, or local trade schools, thoroughly screen applicants for relevant experience, skills, and qualifications, and provide comprehensive on-the-job training.
One of the most common locksmith tasks is lockout services. Locksmiths are frequently called upon to assist individuals who have been locked out of their homes, offices, or vehicles. This involves using specialized tools and techniques to gain entry to the locked property without causing damage to the lock or surrounding areas.
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